India’s wheat export ban: Why it backed down on its offer to help solve the global food crisis

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“We already have enough food for our people, but our farmers seem to have made arrangements to feed the world,” Modi said in April. “We are ready to send the rescuers tomorrow very.”
World’s second largest wheat producer after China was already talking about words. In the 12 months to March, India took advantage of soaring world prices, exporting a record 7 million metric tons of grain. This is an increase of more than 250% compared to the volumes of the previous year. He had also set record export targets for the coming year.
Now those lofty goals have been abandoned and wheat exports banned as deadly heat waves in South Asia slow production and push local prices to record highs.
The move shocked international markets on Monday – especially as it came just days after India assured the world that the unprecedented situation the heat wave would not be have an impact on its export plans. Global wheat prices climbed 6%, with Chicago futures hitting $12.4 a bushel, the highest price in two months. Wheat futures prices fell slightly on Tuesday but are still up almost 50% since the start of the war.
While India is a huge producer of wheat – even this year the country is expected to produce more than 100 million metric tons – most of the grain is used to feed its population of 1.3 billion. By the government’s own admission, the country is “not among the top 10 wheat exporters”.

But the alarm over its export ban highlights the fragility of global food supplies.

How did we come here?

Russia’s invasion of Ukraine has contributed to a historic shock in commodity markets that will keep world prices high until the end of 2024, the World Bank said last month. Food prices are expected to climb 22.9% this year, driven by a 40% rise in wheat prices, he added.
Indeed, Ukraine and Russia together account for about 14% of world wheat production and about 29% of all wheat exports. Vital shipments of agricultural exports, including around 20 million tonnes of grain, are stuck in Ukraine because Odessa and its other Black Sea ports have been blockaded by Russian forces.

Ukraine is among the world’s top five exporters of various key agricultural products, including corn, wheat and barley, according to the US Department of Agriculture. It is also the leading exporter of sunflower oil and flour.

But the food situation was tense even before the start of the fighting in Europe. Tangled supply chains and unpredictable weather – often the result of climate change – had already pushed food prices to their highest level in about a decade. Affordability has also been an issue after the pandemic left millions out of work.

The number of people on the brink of starvation has risen from 27 million in 2019 to 44 million, the United Nations World Food Program announced in March.
A combine harvests wheat in a field on the outskirts of Ahmedabad, India.  REUTERS/Amit Dave

After Modi’s pledge, many vulnerable countries were banking on supplies from India.

“Indian wheat exports are particularly important this year due to the Russia-Ukraine crisis,” Oscar Tjakra, senior grains and oilseeds analyst at Rabobank, told CNN Business.

The “ban will reduce the availability of world wheat for exports in 2022 and support world wheat prices,” he added.

New Delhi’s U-turn on wheat has already been criticized by members of the G7, an organization of some of the world’s largest economies.

On Monday, Ambassador Linda Thomas-Greenfield, the United States’ representative to the United Nations, said she hoped Indian officials would “reconsider this position.”

“We encourage countries not to restrict exports because we believe any restriction on exports will exacerbate food shortages,” she said at a press briefing in New York.

Rise of food protectionism

India responded by arguing that the restrictions are essential for its own food security and also to control prices. Annual inflation in Asia’s third-largest economy hit its highest level in nearly eight years in April, a development that some traders said triggered the export ban.

The government also said the restrictions do not apply “where prior commitments have been made by private traders” and to countries requesting supplies “to meet their food security needs”.

An Indian farmer carries a harvested wheat crop in a field on the outskirts of Jammu, India, Thursday, April 28, 2022.

According to Tjakra, these exceptions should be seen as “good news”, but they make it difficult to assess the impact the ban will have on global trade.

The “severity of the impact” of the ban “will still depend on the export volumes of Indian wheat which are still allowed at the government level and the wheat production volumes of other global wheat producers”, he said. he adds.

Some analysts in India say allowing unrestricted exports was initially a bad idea.

“We don’t know what will happen to the climate in India,” Devinder Sharma, an India-based agricultural policy expert, told CNN Business.

India is among the countries expected to bear the brunt of the impacts of the climate crisis, according to the UN’s authority on climate change, the Intergovernmental Panel on Climate Change (IPCC).

If crops are ruined due to unpredictable weather, India could run out of food and find itself “standing with a begging bowl”, Sharma added.

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India is not the only country looking inward and curbing agricultural exports.

In April, Indonesia began restricting exports of palm oil, a common ingredient found in many foods, cosmetics and household items around the world. It is the world’s largest producer of the product.
Just a month earlier, Egypt had banned exports of staples such as wheat, flour, lentils and beans, amid growing concerns over food reserves in the most populous state. of the Arab world.

“With inflation already on the rise in Asia, risks are skewed towards more food protectionism, but these measures could end up exacerbating food price pressures globally,” Nomura analyst Sonal Varma said on Saturday. .

She added that the impact of India’s wheat export ban “will be felt disproportionately by low-income developing countries”.

Bangladesh is India’s top wheat export destination, followed by Sri Lanka, the United Arab Emirates, Indonesia, Yemen, the Philippines and Nepal, Nomura said.

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